This paper applies the theory of aspiration adaptation to industrial economics. It is motivated by the question, frequently raised in the context of theoretical and empirical research on industrial innovation, of what triggers a firm's innovative activity. We develop a model of the management's...

The dynamics of individual characteristics of economic agents is modeled with the link structure influenced by this dynamics: links between agents with similar characteristics are more stable than those between agents with vastly different characteristics. A simple scaling law describes the...

A model of new-product diffusion is proposed in which a site-percolation dynamics represents socially-driven diffusion of knowledge about the product's characteristics in a population of potential buyers. A consumer buys the new product if her valuation of it is not below the price of the...

This paper proposes a percolation-based model of new-product diffusion in the spirit of Solomon et al. (2000) and Goldenberg et al. (2000). A consumer buys the new product if she has formed her individual valuation of the product (reservation price) and if this valuation is greater or equal than...

A model of new-product diffusion is proposed in which a site-percolation dynamics represents socially driven diffusion of knowledge about the product's characteristics in a population of consumers. A consumer buys the new product if her valuation of it—formed after her witnessing the product...

We propose a stochastic model of interactive formation of individual expectations regarding the business climate in an industry. Our model is motivated by a business climate survey conducted since 1960 in Germany by the Ifo-institute (www.ifo.de). In accordance with the data structure of this...

We empirically investigate distributions of individual consumption expenditure f or four commodity categories conditional on fixed income levels. The data stems from the Family Expenditure Survey carried out annually in the United Kingdom. W e use graphical techniques to test for normality and...

We propose a simple Keynesian business cycle model in which national income expectations of heterogeneous interacting investors affect their investment decisions. The investors' expectation formation is influenced by their sentiment: investors who hold optimistic views about the future state of...

In the context of standard two-period pure-exchange economies with sequential trade, this paper proposes a decentralized coordination mechanism for equilibriumexpectations, facilitated by local interactions between agents. Interactions are modelled stochastically by specifying a family of...

The present note shows that the concept of a distribution economy (Hildenbrand (1974)) is closely related to a framework of an exchange economy in which the agents’ individual characteristics (i.e. preferences and endowments) are random (Hildenbrand (1971), Bhattacharya and Majumdar (1973),...